CK Company sells its products for $50 each. The current production level of the current year is
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Question:
CK Company sells its products for $50 each. The current production level of the current year is 20,000 units, although only 15,000 units are anticipated to be sold.
Unit manufacturing costs are:
Direct materials $8.00
Direct manufacturing labor $10.00
Variable manufacturing costs $7.00
Total fixed manufacturing costs $200,000
Variable Marketing expenses $6.00 per unit
Total fixed marketing expenses $160,000
Required: (a) Prepare income statements using absorption costing and variable costing respectively. (7 marks)
(b) Which inventory costing method do you think would be more useful for internal decision making, such as pricing decisions or product appraisal? Explain (3 marks)
Related Book For
Introduction to Statistical Quality Control
ISBN: 978-1118146811
7th edition
Authors: Douglas C Montgomery
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